China's exports rise for the first time in 7 months, while imports fall

China registered a rise in exports in November for the first time since April. Exports registered a 0.5% growth from the previous year, reaching $291.9 billion, suggesting a potential uptick in demand following months of decline. However, imports decreased by 0.6% to $223.5 billion, following a 3% increase in October, according to customs data released Thursday. China has grappled with sluggish foreign trade throughout the year due to weak global demand and a stalled recovery, despite the country reopening after strict COVID-19 controls were lifted late last year. The trade surplus reached $68.4 billion, a 21% increase compared to October’s figure of $56.5 billion. Despite this improvement, some economists express scepticism about the sustainability of this growth, particularly as it is primarily driven by exports of vehicles and ships. The figure was much better than analysts’ forecasts and followed a 6.4 per cent slump in October. “The improvement in exports is broadly in line with market expectation,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. While exports were now seeing “sequential growth”, he added that “it is unclear if exports can contribute as a growth pillar into next year”. “The European and US economies are cooling. China still needs to depend on domestic demand as the main driver for growth in 2024,” he told AFP in a note. Chinese exports – long a key growth driver – have largely been in decline since last October except for a short-lived rebound in March and April. The world’s second-largest economy expanded a moderate 4.9 per cent in the third quarter, slightly less than Beijing’s five per cent target, which is one of the lowest in years. Officials have struggled to sustain a recovery from the impact of the pandemic, even after removing draconian containment measures at the end of 2022. Exports have been hit by weak global demand, while a debt-fuelled property crisis and low consumption have caused headaches at home. Consumer prices shrank 0.2 per cent in October, marking a return to deflation following a modest rebound from the summer. Meanwhile, some of the nation’s biggest real estate developers owe hundreds of billions of dollars and are teetering on the brink of bankruptcy. On Tuesday, Moody’s downgraded the outlook on China’s credit rating to “negative” from “stable”, citing the country’s rising debt. The ratings agency said the decision reflected growing evidence that Beijing will prop up financially stressed local governments and state-owned enterprises. This, it added, was “posing broad downside risks to China’s fiscal, economic and institutional strength”. Ting Lu, chief China economist at Japanese bank Nomura, said Thursday that property woes remained “the single largest drag affecting China’s economy”. “Despite the multitude of stimulus measures announced recently, we believe it is still too early to call the bottom,” he said in a note. The weakness in consumer activity was highlighted by a 0.6 per cent drop in imports to $224 billion in November, which marked a return to contraction. They had seen a surprise jump in October, bucking a forecast sharp drop and marking the first month of on-year growth since late last year. It was hoped the rise could be a signal that consumer sentiment was recovering. Demand for Chinese exports has been weak since the Federal Reserve and central banks in Europe and Asia began raising interest rates last year to cool inflation that was at multi-decade highs. China’s property sector remains a drag on the economy, with sales slumping and developers struggling to repay massive amounts of debt. The central bank has eased borrowing rules and cut mortgage rates for first-time home buyers while providing some tax relief measures for small businesses. Late last month, it announced plans to issue 1 trillion yuan ($330 billion) in bonds for infrastructure projects and disaster prevention, dipping deeper into deficit to try to nudge the economy into higher gear. Thursday’s data was released as President Xi Jinping was meeting with EU leaders. EU leaders were expected to discuss the large regional trade deficit with China and other issues including climate change and the Russia-Ukraine war. Exports to the EU fell 11% from a year earlier to $38.3 billion in November compared. Imports slid 1% to $23.2 billion. EU chief Ursula Von der Leyen has said that the EU would tolerate a chronic imbalance in trade with China. Beijing responded by saying that it doesn’t make sense for the EU to curb exports of sensitive technology while trying to increase exports to China. Curbs on exports of sensitive technology are a longstanding point of contention between Beijing and the U.S. and other Western nations. With inputs from agencies.